USAF Could Lose Next Tanker Duel Oversight

20 May 2009By Ward Carroll

This article first appeareed in Aerospace Daily & Defense Report.

Pentagon officials have not yet decided whether an upcoming KC-X competition between Boeing and a Northrop Grumman/EADS North America team to build new aerial refueling tankers will be managed by the U.S. Air Force or the Defense Department's acquisition chief, according to David Van Buren, acting assistant secretary of the Air Force for acquisition.

The competition was called off last year by Defense Secretary Robert Gates after threats from Boeing that it would not compete under the parameters set forth at the time. In February 2008, Northrop Grumman/EADS won a $1.5 billion contract to develop an Airbus A330-200-based tanker, but Boeing's protest of the process turned up several missteps on the part of the Air Force in managing the duel. Northrop's contract was dashed as a result.

The Air Force's acquisition corps has fallen under scrutiny in part because of the tanker missteps, problems in managing the program to buy new combat-search-and-rescue helicopters and -- years ago -- an admission from former top procurement official Darleen Druyun that she unfairly steered contracts to Boeing prior to taking an executive position with the company.

While Air Force officials acknowledge problems in some competitions, they are defending their overall record. Out of 165,000 competitive contracts managed by USAF last year, 121 sparked protests. Two -- or just 0.07 percent -- were sustained, says Lt. Gen. Mark Shackelford, military deputy to the Air Force acquisition czar. "The notion that our process...is a broken process is not borne out by the statistics," he says.

If the service is empowered to manage the competition, Shackelford says officials are taking the steps to ensure the process is consistent and fair so that if another protest is filed, the service will not be found at fault and airframes can begin being delivered.

However, the stressing conditions leading up to the last fouled attempt have not changed. Boeing is likely to propose a 767 variant; during the earlier competition, Boeing proposed a 767-200LRF, a new variant that combined doors and floors, cockpit and tail sections from other commercial models. This made Boeing's development cost higher than Northrop and EADS', which was able to propose the A330-200 with lower up-front cost. And the Pentagon must still grapple with how to fairly compare two dissimilar commercially derived products on a level playing field.

During the course of past attempts at the competition, both contractors threatened not to bid, effectively holding the Pentagon hostage to shift acquisition parameters to fit their proposals or dash the hope of a competition.